Stock futures were mixed early Monday morning as Wall Street waited for the Institute of Supply Management's data for manufacturing for the month of September. Disappointing announcements by Citigroup and UBS on their subprime investments pushes futures slightly lower.
The Dow Jones Industrial Average futures fell 6 points to 13,989.00. The S&P 500 broader index rose 0.5 points to 1,538.60 while the Nasdaq 100 Futures were unchanged at 2,114.00. Oil futures traded down 15 cents, or 0.2 percent, to $81.51 a barrel as of 6:50 a.m.
U.S shares of investment bank UBS AG (UBS), Europe’s third-largest bank, are expected to drop on news that the bank will write down nearly $3.4 billion in assets tied to the bank’s investments in the U.S. subprime mortgage market. UBS closed on Friday up 14 cents, or .26 percent, to $53.25.
Citigroup Inc. (C), the world's largest bank, announced early Monday that they expect third-quarter earnings to decline based off the poor performance in their subprime assets. The Bank expects to report a decline in net income of about 60 percent year over year, the bank said in a statement. Citigroup shares fell 21 cents, or 0.45 percent, to $46.67 on Friday.
"The decline in income was driven primarily by weak performance in fixed income credit market activities, write-downs in leveraged loan commitments, and increases in consumer credit costs," said Citigroup Chairman and CEO Charles Prince.
Estimates on manufacturing data, which is due at 10 a.m. EST, are mixed according to estimates by Thomson Financial. The August index was 52.9 and the expected September index reading will be 53.0. A reading of more than 50 indicates expansion. The markets will also be waiting for the non-manufacturing sector data later this week.
UBS said the bank expects to record a loss between $600 million to $684 million in the third quarter. The Suisse bank is latest in a series of the world’s largest investment banks to record hits to their portfolios, which had invested heavily in subprime assets.
The bank’s announcement also included a major management shakeup. UBS Investment Bank CEO Huw Jenkins, will step down while the UBS Group CEO Marcel Rohner will oversee the investment bank portion for the time being, the bank said in a release. The bank will also cut 1,500 jobs, or about 7 percent of its workforce, as a result.
Economic News -
Former Federal Reserve Chairman Alan Greenspan said that the credit crisis at the center of Wall Street’s worries throughout the summer might be coming to an end, according to a report by Reuters.
Greenspan told an audience in London that consumer spending and economic growth was also likely to remain under pressure from the continued housing glut, and does not expect the housing market to recover in the near future.
Corporate News -
Mobile phone maker Nokia (NOK) announced they will purchase U.S. navigation software maker Navteq Inc. (NVT) for $7.6 billion. Navteq shares closed on Friday up 75 cents, or 0.97 percent, to $77.97. Navteq shares have more than doubled year to date. Nokia shares closed down 1 cent, or .03 percent, to $37.93.
The Dow Euro Stoxx 50 index, the gauge of the top 50 European companies, dropped 23.2, or 0.53 percent, to 4358.55. The London-based FTSE index rose 1.598, or 0.03 percent, to 6.458.40.
In Asia, Japan's Nikkei gained 60.27, or 0.36 percent, 16,845.96. Hong Kong's Hang Seng closed up 77.32, or 0.3 percent, 27,142.47 on Friday.